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UK industry shines but Brexit shadow looms

Sterling edges up after British industrial and manufacturing output prints above forecasts. As Ciara Lee reports, the UK's goods trade deficit also improved, though construction output was sharply down.

TRANSCRIPT +

Rathcheting up, British industry snared its strongest month this year in September.
Both industrial and manufacturing output shot up by 0.7 percent,
the fastest growth for each sector since December last year.
Industrial output, which includes manufacturing, accounts for 14 percent of Britain's economic output.
A good sign for an economy that faces a potentially difficult 2018 as Brexit approaches.
(SOUNDBITE) (English) CIBC, HEAD OF FX STRATEGY, JEREMY STRETCH, SAYING:
"I think the numbers themselves in terms of the IP manufacturing data will vindicate the numbers that were released in terms of the provisional GDP print. So I think that's the good news. But of course the real economy doesn't account for the largest or the bulk of economic activity in the UK. So whilst industrial output and manufacturing is holding in, there is still question marks over the consumer sector."
And that's not looking so bright.
Separate figures revealed British shops suffered their worst October for sales in a decade.
And a 1.6 percent monthly drop in construction reveal concerns over the outlook.
(SOUNDBITE) (English) CIBC, HEAD OF FX STRATEGY, JEREMY STRETCH, SAYING:
"Parts of the economy are benefiting from the cheapening up of sterling, the more competitive position for UK exports. But unfortunately there are still obvious headwinds ahead both political and macro economic. And of course those pressure points in terms of the consumer sector on real earnings do suggest that growth is going to remain relatively subdued for the foreseeable future
."
Britain's goods trade deficit narrowed by much more than expected though thanks to a rise in exports.
But it wasn't enough to prevent a deterioration in Britain's trade performance in the third quarter, which looks likely to be a sizeable drag on economic growth.

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